Wills, Legacies and Bequeaths
“It is the duty of a Muslim who has anything to bequeath not to let two nights pass without including it in his Will”
Islam places great emphasis on making a Will. By writing a Will you can ensure the correct distribution of your wealth, instruct that your debts are covered, and make provisions for family and loved ones. Leaving a bequest to a charity will count as Sadaqah Jariyah, allowing your good deeds to benefit you even after your passing.
“When a man dies, his acts come to an end, except for three: recurring charity (sadaqah jariyah), knowledge (by which people) benefit, or a pious son who prays for him”
It is optional for a Muslim to leave up to a third of their estate (after funeral expenses and payment of debts) to whomever they wish. In the United Kingdom, bequests to charities are exempt from inheritance tax and capital gains tax. If your estate is liable for inheritance tax, you can reduce the amount by choosing to give money to a charity in your Will. Gifts made to a charity in the seven years before your death are exempt from inheritance tax.
Many people want to leave money to charities. This is an effective way of ensuring that the causes close to your heart can benefit from your estate. As with any aspect of will-writing, legacies and bequests must be dealt with in a legally valid manner.
How can they help my charity?
Bequests and Legacies are a key source of income for many charities. They provide a unique opportunity for many charitable organisations to receive a potentially large, one-off payment – or even the use of an asset other than cash. For example, many charities have had their premises donated through a bequest; at the other end of the spectrum, many galleries are filled with artworks donated in this way.
How can I leave a charitable bequest?
A Bequest is an instruction in your will. Upon your death this document will be read by your executors (the individuals you have nominated to carry out your wishes) and they will act on your instructions.
You can create a charitable bequest by simply leaving details in your Will of the asset you wish to bequeath, and your intended beneficiary. You should also ensure that your Will is prepared in accordance with the law; amongst other things you must be in sound mind at the time of writing, and it should be signed by witnesses.
Some people choose to leave Bequests through a Trust system. In these arrangements, assets are transferred into trust, and trustees are appointed to ensure that the bequest is properly handled. This is normally reserved for larger or more complex bequests.
What are legacies and bequests?
Many of us wish to ensure that, when we die, some of our assets are given to charities or other organisations that we support. Leaving a Bequest in your will is the simplest way of achieving this.
How do we accept them?
Disbursements of assets following a Legacy or Bequest will be made by the deceased individual’s executors; this is often a friend or family member, but could be aprofessional or bank.
Different types of Legacies. (Pecuniary, Residuary and Specific most common)
There are several different types of legacy. The three most common are pecuniary, specific, and residuary.
What are Bequests?
A bequest is a gift made by an individual in their will. Bequests can be made to a range of individuals or organisations; most people choose to bequeath the majority of their estate (that is, their total assets on their death) to their spouse or family. Many others, though, choose to leave some of their assets to charity.
The terms ‘bequest’ and ‘legacy’ basically describe the same thing.
A Pecuniary Legacy is the most straight forward Legacy where a specified amount is given to a charity. The main drawback is that the value is eroded over time by inflation.
Where either all or a proportion of the residue of an estate are given after all specific bequests have been made. This type of gift in your Will means that however much your financial circumstances change, the proportion of your estate each person receives will stay the same. Usually it is shown as a percentage of what is left of your estate - once all the expenses, debts and specific gifts have been taken out.
A Specific Bequest is when a donor bequeaths a specific item to a charity which can be kept or, can be sold by the beneficiary.
Long stop Legacy
Long stop Legacies state that if all other provisions of the legacy fail, e.g. all named residuary beneficiaries have died, or there are conditions attached which cannot be met, then the estate reverts to a charity.
Reversionary or Life interest
A Life Interest clause is often used when an elderly relative needs to be cared for e.g “My house is given to Valley Kids with a life interest to my Uncle” This ensures support for a family member whilst providing a valuable legacy to a charity.
The following steps should help with this:
A. Making a Will
Value your assets
Start by making a list of everything you own.
Decide who will benefit
Note down the people (or charities) who you want to pass on your assets to. Write down their names and addresses and what you would like to leave them.
Choose your executors
These are the people you choose to make sure that your wishes are carried out such a family, friends or solicitors.
Choose a solicitor
Making a Will isn’t as expensive as most people think but because it is a legal document we strongly advise you to use a solicitor. Doing so will ensure that your Will is legally correct and that all your wishes can be carried out.
Keep your will safe
You can ask your solicitor or your bank (usually for a fee) to do this.
Review your Will on a regular basis
People are usually aware of the more dramatic changes to their circumstances – births and marriages for example. However, the smaller changes tend to creep upon us. That is why it is a good idea to review your Will on a regular basis, say every 3 years.
B. Updating a Will
It is easy to make a new Will to account for altered circumstances, but for minor alterations you may just need to add a Codicil. It is less costly and an effective way in which donors can add instructions to their Will bequeathing legacies and gifts to Shakiry Charity without making a completely new Will.
A codicil must be signed and witnessed by two people in the same way as a Will. They need not be the same people who witnessed the original Will and they should not be beneficiaries either under the original Will or this or any other Codicil.
A Codicil should be kept with the Will it changes to be sure that it is not overlooked.
C. Will wording
In order to ensure that there is no misunderstanding in your Will it is important that your solicitor refers to specific wording. The correct wording for the three most common forms of legacy to Shakiry Charity for Social Solidarity include:
For a share of your estate
For a specific sum
For a specific item
Legacies are a really important source of income for charities and a gift in your Will, no matter how small, could make a real difference.
Codicil: A document containing a change or addition made to an existing Will
Conditional Gift: A gift which is subject to a fulfillment of a particular requirement or
Endowment Fund: Where capital is held in a trust fund and only the income generated can be spent on the charity’s work.
Estate: Everything you own at the time of your death.
Executor: The people you appoint to handle your affairs according to your will.
Intestate: When someone dies without making a will.
Legacy/Bequest: A gift left in a will
Legator: A person who has died and left a gift to charity.
Life Interest: Where someone is given use of an asset for their life, after which it goes to someone else.
Pecuniary Gift: A fixed sum of money left as a gift in a will.
Pledger: A person who tells a charity that they intend to leave a gift in their ill, or have already done so.
Probate: The legal procedure which establishes that a will is valid and genuine – this gives the executors the authority to act.
Residual Gift: A gift of the residue of the estate (i.e. what is left after debts, expenses and other bequests have been made). This is usually expressed as a percentage.
Specific Gift: A gift of a particular asset, for example a building, jewelry, works of art, stocks or shares.
Testator: The person making the will.
Will: A legal document which provides for the transfer of a person’s property when they die.
Legacies are a really important source of income for charities and a gift in your Will, no matter how small, will make a real difference to a vulnerable and needy person.
Please contact our offices for further information on Leaving a Gift in your Will